Debt financing is obtaining capital that must eventually be paid back. This is most often in the form of loans that must be paid back with interest within a fixed time horizon.
- Commercial Banks include traditional savings banks, savings and loans, and commercial banks, and are generally the first place small business owners think of when looking for institutional financing.
- Credit Unions can offer generous terms to their members, but make mostly consumer loans.
- Commercial Finance Companies provide business loans rather than consumer loans. A small business’s primary use of a commercial finance company is to borrow money for the purchase of inventory and equipment.